Quick answer
Choose an invoice finance provider by comparing total cost in dollars on your own invoices, then testing the contract: whole-ledger or selective funding, recourse, minimum volumes, notice periods, what it registers on the PPSR, who contacts your customers and how clearly it reports. The cheapest advertised pricing often hides lock-ins and minimum fees that matter more.
Key points
- Ask every provider to price the same three real invoices, paid early, on time and late, in dollars
- Minimum volumes, termination notice and lock-in periods can cost more than the headline fees
- Check exactly what is registered on the PPSR, since an all-assets claim can block other lending
- Decide who talks to your customers and how, before signing, not after the first complaint
- Whole-ledger and selective facilities suit different businesses, so know which you need
Two invoice finance providers can quote the same headline pricing and leave you paying wildly different amounts a year later. The difference is rarely in the brochure. It sits in the minimums, the notice period, the security clause and the way the fee clock runs on a late-paying customer.
So rather than a league table, here is a way to choose. It starts with an experiment you control, then moves through twelve questions, and ends with a check against your bank.
Start with the same three invoices
Before you collect any proposals, pick three real invoices from your ledger:
- one a customer paid early or on time
- one paid around 20 days late
- one that dragged to 75 days or more
Send the same three to every provider and ask: “What would this have cost us in total dollars on each?” Insist on an answer in dollars, including every fee.
You will quickly see which providers price in a way that rewards how your customers actually behave. A facility that looks cheap on the on-time invoice can be the most expensive on the 75-day one. Our invoice finance calculator lets you build a rough version yourself first, so you know when a quote looks off.
The twelve questions
On the product
1. Whole ledger or selective? A whole-ledger facility funds every eligible invoice, usually at a lower per-invoice cost, but often with minimum volumes. Selective funding lets you choose invoices one at a time. It is flexible but typically costs more per use. Match this to how steady your sales are.
2. Factoring or discounting? In factoring the provider collects, and in discounting you do. The comparison of factoring and discounting covers the trade-off. Some providers offer only one, which narrows your choice.
3. Recourse or non-recourse? If a customer fails to pay, who bears the loss? Most facilities are recourse. If a provider offers non-recourse, ask what it covers: usually debtor insolvency only, not disputes or slow payment.
On the cost
4. What are all the fees? Request a schedule covering establishment, service, funding charges, audit, minimum monthly fees, fees on unfunded invoices and termination. Anything not in writing will turn up later.
5. What minimums apply? Some contracts charge a minimum monthly fee or require a minimum turnover. If your sales are seasonal, that can bite in slow months.
6. What happens to the fee clock on late invoices? Some providers charge more after a set number of days, or stop funding an invoice entirely at 90 days and demand repayment. Ask for the rule in plain terms.
On the contract
7. How long is the term, and how do I leave? Note the initial term, the renewal clause and the notice period. A 12-month term with a 90-day notice window and automatic renewal can lock you in longer than you expect. Ask what the termination fee is and whether you must repurchase outstanding invoices.
8. Who can change the terms? Check whether the provider can alter advance rates, concentration limits or fees on notice. Flexibility cuts both ways.
On security
9. What exactly will you register on the PPSR? Some providers register over receivables only; others claim all present and after-acquired property. The second can block an equipment loan or a bank overdraft later. Ask for the registration details in writing. The PPSR entry explains why this matters.
10. Will you need a director guarantee? Many facilities for small businesses do. Read the guarantee, and see our guide on business loans and personal guarantees before signing.
On the day-to-day
11. How will you deal with my customers? In factoring, the provider will contact customers about payment. Ask how it introduces itself, how it chases late payers, and whether you can approve the wording. A heavy-handed collections call to your best customer is a business risk.
12. What reporting and integration do you offer? Look for a portal that connects to Xero, MYOB or QuickBooks, shows what’s funded and what’s owed, and exports clean records for your accountant. Test it with a demo.
Not sure which of these questions matter most for your ledger? Tell us about your invoices and a person will help you prioritise.
How do different provider types compare?
Providers in Australia fall roughly into four groups. Profiles on this site give details of the individual lenders, and the lines between groups blur.
| Type | Typically strong at | Typically less suited to |
|---|---|---|
| Bank debtor finance | Competitive pricing for established ledgers, one relationship | Smaller, newer or messier ledgers; slower set-up |
| Specialist invoice financiers, e.g. Bibby Financial Services, Scotpac | Whole-ledger facilities with account management | Very small or one-off needs |
| Fintech selective funders, e.g. Earlypay, FundTap, Butn | Speed, online process, pick-your-invoices flexibility | Highest-volume ledgers where minimum pricing is better |
| Trade and supply chain financiers | Importers and goods in transit | Services businesses |
Product details change, so read each provider’s own profile and website for what it currently offers. Our guide on how to choose a business lender covers the general checks that apply to any lender.
Red flags worth walking away from
- A proposal with no total-cost example in dollars
- Fees described as “to be confirmed after assessment”
- An all-assets security claim for a facility that only needs receivables
- Pressure to sign the same day
- A provider that won’t let you speak to your accountant or solicitor first
- An unwillingness to say what happens if your customer disputes an invoice
If something goes wrong with a licensed credit product or a financial service, AFCA is the external dispute resolution scheme for many providers. Check whether your provider is a member before you sign.
A worked example: comparing two proposals
Illustrative only. A Melbourne packaging wholesaler with $90k of monthly invoicing receives two proposals.
Provider A advertises a low service fee, a funding charge that runs daily, a 24-month term, a minimum monthly fee equal to funding $60k of invoices, a three-month notice period and a registration over all present and after-acquired property.
Provider B has a higher service fee, a 12-month term, no minimum fee, a one-month notice period and registration over receivables only.
The wholesaler runs its three sample invoices through both. On the on-time invoice, A is cheaper by around $140. On the 75-day invoice, B is cheaper by around $320 because its funding charge steps up less. In a slow month when sales dip to $45k, A’s minimum fee adds roughly $400 of cost on funding that was never used. The all-assets registration also stops the wholesaler’s plan to add a forklift loan next year.
The owner chooses B, and tells the bank, which agrees a short priority letter within a week. The headline pricing was nearly identical. The real difference was in the clauses.
Check your bank before you shop
Before you sign anything, find out what your bank holds. A general security agreement over receivables usually has to be dealt with first. Some banks are comfortable with a priority arrangement, and some will offer their own debtor facility, which is worth seriously considering since banks are often the lowest-cost lender. Find out early so the provider you pick can actually complete.
Making the shortlist
A sensible process looks like this:
- Pull your aged receivables report and pick the three sample invoices.
- Ask your bank what it will do.
- Request proposals from two or three providers of different types.
- Compare total dollars, term, notice, security and reporting side by side.
- Have your accountant review the shortlist and your solicitor review the final contract.
Where we come in
If you would rather not run that process alone, our enquiry takes about a minute and doesn’t involve a credit check, so it won’t mark your credit file. Your details aren’t sent out to a crowd of invoice financiers. A real person reads your enquiry and phones to talk through your invoices, customers and what your bank holds.
The more accurately you describe your invoice volumes and customer payment times, the more likely the first option we suggest is the right one.
Frequently asked questions
What fees should I ask about?
Ask for every charge in writing: set-up or establishment, service or administration, the funding or discount charge, ledger audit, minimum monthly fees, fees on unfunded invoices, bank transfer fees, and termination or early exit charges. Then ask for a worked example in dollars on invoices that match yours.
Is a longer contract a red flag?
Not automatically, as lower pricing sometimes comes with a 12-month term. The concern is a long term combined with minimum volumes, a long notice period and an automatic renewal. Together they can trap you in a facility you have outgrown.
Should I choose a bank or a specialist provider?
If your bank can offer a debtor facility that fits your invoices, take it seriously, since banks are often the cheapest option and keep everything in one place. Specialists tend to lend more flexibly against smaller or younger ledgers, to businesses a bank declines, or on a selective basis.
Can I use more than one provider?
Usually not on the same receivables, because one provider will want first-ranking security over them. Some businesses split by customer or by invoice type, which needs careful drafting of what each financier can claim.
How quickly can a facility be set up?
Selective and simple facilities can be live within days, while whole-ledger arrangements with due diligence on your ledger and customers, and any bank priority arrangement, often take a couple of weeks or more. Starting with clean records and your bank's position clarified speeds things up.